Using the Big Mac index for comparing construction costs internationally

This paper explores the use of purchasing power parity (PPP) in the comparison of construction costs between different countries, and whether the development of construction-specific indices will improve reliability.

The approach adopted is to compare the construction cost of a typical five star international hotel per square metre in each of ten major cities using a range of PPP methods and to comment on their variability. In particular, this paper looks at whether an index based on the price of a McDonalds Big Mac3 hamburger is a viable alternative when compared against the mainstream methods. The recent publication of construction-specific indices as part of the Eurostat-OECD joint PPP program is also compared against generic indices and the discrepancy is calculated.

The paper concludes with reflections about which approach is preferable when attempting to assess global construction relativities and what further research is needed.

Are real exchange rates nonlinear with a unit root? Evidence on PPP for Italy : a note

In this article, we apply the recently developed threshold autoregression model to examine both linearity and stationarity of Italy's real exchange rate vis--vis her six trading partner (G6) countries. Our main finding is that Italy's real exchange rate is a nonlinear process that is not characterized by a unit root process for five of six trading partner countries. This provides strong support for purchasing power parity.

Integrating cost-effectiveness evidence into clincal practice guidelines in Australia for acute myocardial infarction

 A teaching hospital is working with the Victorian State Government and universities, integrating cost-effectiveness evidence into clinical practice guidelines (CPGs), protocols and pathways for respiratory and cardiology interventions. Acute myocardial infarction (AMI) findings are reported. Results will stimulate cost-effective practice and inform medical associations, federal and state governments and international organisations developing CPGs. Published CPGs by the American College of Cardiology/American Heart Foundation for AMI in 1999 are reviewed by a large interdis- ciplinary hospital-based committee given cost-effectiveness evidence. Levels of evi- dence criteria rating on methodological rigor for effectiveness and costs are applied. National Health and Medical Research Council (NHMRC) grades of recommendation criteria for combinations of relative effectiveness versus relative costs and cut-off points are used. Extrapolating results between countries was addressed by applying the OECD's health purchasing power parity series. Recommendations for revisions to United States guidelines and for local application are formulated. United States Guide- lines require updating: Regarding angioplasty, percutaneous transluminal coronary angioplasty (PTCA) is cost-effective for men aged 60 years relative to recombinant tissue plasminogen activator (tPA),with additional cost per life year saved of 274 ecu. PTCA with discharge after 3 days is cost-effective in low-risk AMI. Regarding GP llb/Illa drugs, Abciximab during intervention incurred equal mean hospital costs for placebabciximab bolus, and abciximab bolus+ infusion with incremental 6-month cost for the latter treatment costing US$ 293 per patient. Agent recouped almost all initial therapy costs with significant benefits. Incre- mental cost of abciximab per event prevent- ed is US$ 3,258.Tirofiban was compared to placebo after high-risk angioplasty for AMI or unstable angina.Tirofiban decreased the rate of hospital deaths, myocardial infarc- tion, revascularisation at 2 days by 36% relative to placebo (8% vs. 12%) without increased cost. Clinical benefits were similar at 30 days.Tirofiban+heparin+aspirin was compared to heparin+aspirin.Tirofiban arm resulted in net savings of 33,418 ecu per 100 patients for the first 7 days of treatment. Regarding thrombolytics,tPA is more cost- effective than streptokinase. Incremental costs for each life saved when streptokinase is substituted by recombinant tissue plasmi- nogen are 31%,45%, 97% higher in Germa- ny, Italy and the United States than in the United Kingdom. Regarding anticoagulants, enoxaparin is a promising alternative to unfractionated heparin for hospitalised patients with non-Q-wave myocardiai infarc- tion or unstable angina, saving C$ 1,485 per patient over 12 months with 10% reduction in 1 year risk of death, myocardial infarction or recurrent angina. Regarding anti- arrhymics, the cost-effectiveness of no amiodarone, amiodarone for patients with depressed heart rate variability (DHRV),and amiodarone for patients with DHRV plus positive programmed ventricular stimula- tion (PPVS) for high-risk post-AMI was investigated. Amiodarone for DHRV+PPVS patients was dominated by a blend of the two alternatives. Compared to no amioda- rone, the incremental cost-effectiveness of amiodarone for DHRV patients was US$ 39,422 per quality adjusted life year gained. Amiodarone for DHRV is the most appropriate. Other CPG updates concern serum markers, for example, cardiac troponin I assay (c-Tnl), cost advantages of ad hoc angioplasty and secondary prevention through antioxidants and pravastatin. Australian costs are reported later in the paper.

Evaluation of construction contractor performance: a critical analysis of some recent research

International comparisons of construction industry performance are notoriously difficult. A recent comparative study, extensive in scope and using an innovative approach, is reviewed and questions raised regarding various aspects of the methodology adopted, the validity of the conclusions drawn and manner in which outcomes were reported. Particular areas of concern include the unequivocal statement of conclusions that are based on a small sample, and the use of data from that sample that are, in fact, no more than estimates of project performance. Attention is drawn to the limitations of the research reported and the reliability of the methods used, and the data gathered is examined.

International comparisons of construction industry performance: further investigations

While there have been many attempts at comparisons of construction performance over the past 50 years, the results have generally been inconclusive and/or contradictory.

Such comparisons are of great interest to industry, governments and theorists alike but there is little agreement as to how they are best done. A variety of methodologies have been used, however, the lack of satisfactory outcomes has been due largely to one factor, the lack of a truly reliable method for comparing construction costs in different currencies

Exchange rates are recognised as being unsuitable, and while purchasing power parity (PPP) has a long history, the method still has many critics. In addition, the nature of the building industry and its products makes the establishment of reliable construction PPPs very difficult. Both the UN’s International Comparison Program (ICP) and the European Union gather data for the production of construction-specific PPP indices, but neither body publishes them, as there is too much doubt about their reliability.

New approaches are being developed and some are soon to be trialled. This paper looks at the problems, describes and discusses some new approaches, and assesses their potential.

Are bilateral real exchange rates stationary? Evidence from Lagrange multiplier unit root tests for India

The paper examines the stationarity of India’s real exchange rate vis-a` -vis 16 of its major trading partner countries for the period 1960–2000. Application of the conventional ADF unit root test, the Lagrange multiplier (LM) unit root test with one structural break, and the LM unit root test with two structural breaks provides evidence that India’s exchange rate vis-a` -vis 15 out of 16 countries is stationary, implying support for purchasing power parity.

Are nominal exchange rates and price levels co-integrated? new evidence from threshold autoregressive and momentum-threshold autoregressive models

The goal of this paper is to examine evidence for co-integration between nominal exchange rates for Canada, the UK, Japan, Germany, Italy and France (G6) vis-à-vis the US dollar, and the relative price ratios using monthly data over the period 1973:01 to 1997:04. Motivated by the fact that exchange rate adjustment may be asymmetric, we allowed for asymmetric adjustment in exchange rates by using the threshold autoregressive model and the momentum threshold autoregressive model. We do not find any evidence of a co-integrating relationship; hence, we fail to establish long-run purchasing power parity.

Evidence on PPP from a cointegration test with multiple structural breaks

Despite a plethora of studies on purchasing power parity (PPP), those that take a cointegration approach have found mixed evidence on PPP. The goal of this article is to obviate existing tensions in the PPP literature by using a simple test for cointegration between nominal exchange rate and relative prices that accounts for multiple structural breaks. We find that for 14 out of 15 OECD countries, there is evidence of a cointegration relationship between nominal exchange rate and relative prices at the 5% level. Only for Japan, we find evidence for cointegration at the 2.5% level. These results suggest overwhelming evidence of support for PPP for the OECD countries.

Evidence on PPP for selected Asian countries from a panel cointegration test with structural breaks

The goal of this article is to examine evidence for purchasing power parity (PPP) for a panel of Asian countries, namely Malaysia, Thailand, India, Pakistan, Sri Lanka and the Philippines. Our main contribution is that for the first time in this literature we use a panel cointegration test, developed by Westerlund (2006), which allows us to incorporate multiple structural breaks. We find that using Gregory and Hansen's (1996) residual-based test for cointegration and Pedroni's (1999) panel cointegration test without structural breaks provide weak evidence of cointegration between nominal exchange rates vis-à-vis the US dollar and relative prices. However, when we use the Lagrange multiplier panel structural break cointegration test we find strong evidence of panel cointegration, providing evidence for PPP.

Factor analysis of partners' commitment to risk management in public-private partnership projects

Purpose – The purpose of this paper is to investigate and uncover key determinants that could explain partners' commitment to risk management in public-private partnership projects so that partners' risk management commitment is taken into the consideration of optimal risk allocation strategies.

Design/methodology/approach – Based on an extensive literature review and an examination of the purchasing power parity (PPP) market, an industry-wide questionnaire survey was conducted to collect the data for a confirmatory factor analysis. Necessary statistical tests are conducted to ensure the validity of the analysis results.

Findings – The factor analysis results show that the procedure of confirmatory factor analysis is statistically appropriate and satisfactory. As a result, partners' organizational commitment to risk management in public-private partnerships can now be determined by a set of components, namely general attitude to a risk, perceived one's own ability to manage a risk, and the perceived reward for bearing a risk.

Practical implications – It is recommended, based on the empirical results shown in this paper, that, in addition to partners' risk management capability, decision-makers, both from public and private sectors, should also seriously consider partners' risk management commitment. Both factors influence the formation of optimal risk allocation strategies, either by their individual or interacting effects. Future research may therefore explore how to form optimal risk allocation strategies by integrating organizational capability and commitment, the determinants and measurement of which have been established in this study.

Originality/value – This paper makes an original contribution to the general body of knowledge on risk allocation in large-scale infrastructure projects in Australia adopting the procurement method of public-private partnership. In particular, this paper has innovatively established a measurement model of organisational commitment to risk management, which is crucial to determining optimal risk allocation strategies and in turn achieving project success. The score coefficients of all obtained components can be used to construct components by linear combination so that commitment to risk management can be measured. Previous research has barely focused on this topic.

A modified LLC panel unit root test of the PPP hypothesis

In a recent study, Westerlund (Empir Econ 37:517–531, 2009) shows that the performance of the popular LLC (Levin et al., J Econ 108:1–24, 2002) panel unit root test depends critically on the choice of lag truncation used when correcting for serial correlation, and that it is only when this parameter is set as a function of time that the power raises above size. The purpose of the current paper is to propose a modified test that does not suffer from this drawback. The new test is not only simpler to compute but also superior in terms of small-sample performance, which is illustrated using an example purchasing power parity for less developed countries.

Testing for unit roots in panel time-series models with multiple level breaks

This paper proposes two new unit root tests that are appropriate in the presence of an unknown number of structural breaks in the level of the data. One is based on a single time series and the other is based on a panel of multiple series. For the estimation of the number of breaks and their locations, a simple procedure based on outlier detection is proposed. The limiting distributions of the tests are derived and evaluated in small samples using simulation experiments. The implementation of the tests is illustrated using as an example purchasing power parity.

An international survey of toric contact lens prescribing

To characterize toric contact lens prescribing worldwide. Up to 1,000 survey forms were sent to contact lens fitters in up to 39 countries between January and March every year for 5 consecutive years (2007–2011). Practitioners were asked to record data relating to the first 10 contact lens fits or refits performed after receiving the survey form. Only data for toric and spherical soft lens fits were analyzed. Survey data collected since 1996 were also analyzed for 7 nations to assess toric lens fitting trends since that time. Data were collected in relation to 21,150 toric fits (25%) and 62,150 spherical fits (75%). Toric prescribing ranged from 6% of lenses in Russia to 48% in Portugal. Compared with spherical fittings, toric fittings can be characterized as follows: older age (29.8 ± 11.4 years vs. 27.6 ± 10.8 years for spherical lenses); men are overrepresented (38% vs. 34%); greater proportion of new fits (39% vs. 32%); use of silicone hydrogel lenses (49% vs. 39%); and lower proportion of daily disposable lenses (14% vs. 28%). There has been a continuous increase in toric lens prescribing between 1996 and 2011. The proportion of toric lens fits was positively related to the gross domestic product at purchasing power parity per capita for year 2011 (r2 = 0.21; P=0.004). At the present time, in the majority of countries surveyed, toric soft contact lens prescribing falls short of that required to correct clinically significant astigmatism (≥0.75 diopters) in all lens wearers.

An international survey of daily disposable contact lens prescribing

The aim was to determine the extent of daily disposable contact lens prescribing worldwide and to characterise the associated demographics and fitting patterns. Up to 1,000 survey forms were sent to contact lens fitters in up to 40 countries between January and March every year for five consecutive years (2007 to 2011). Practitioners were asked to record data relating to the first 10 contact lens fits or refits performed after receiving the survey form. Survey data collected since 1996 were also analysed for seven nations to assess daily disposable lens fitting trends since that time. Data were collected in relation to 97,289 soft lens fits, of which 23,445 (24.1 per cent) were with daily disposable lenses and 73,170 (75.9 per cent) were with reusable lenses. Daily disposable lens prescribing ranged from 0.6 per cent of all soft lenses in Nepal to 66.2 per cent in Qatar. Compared with reusable lens fittings, daily disposable lens fittings can be characterised as follows: older age (30.0 ± 12.5 versus 29.3 ± 12.3 years for reusable lenses); males are over-represented; a greater proportion of new fits versus refits; 85.9 per cent hydrogel; lower proportion of toric and presbyopia designs and a higher proportion of part-time wear. There has been a continuous increase in daily disposable lens prescribing between 1996 and 2011. The proportion of daily disposable lens fits (as a function of all soft lens fits) is positively related to the gross domestic product at purchasing power parity per capita (r(2) = 0.55, F = 46.8, p < 0.0001). The greater convenience and other benefits of daily disposable lenses have resulted in this modality capturing significant market share. The contact lens field appears to be heading toward a true single-use-only, disposable lens market.

A note on the use of the LLC panel unit root test

One of the single most cited studies within the field of nonstationary panel data analysis is that of LLC (Levin et al. in J Econom 98:1 - 24, 2002), in which the authors propose a test for a common unit root in the panel. Using both theoretical arguments and simulation evidence, we show that this test can be misleading unless it is based on the same bandwidth selection rule used by LLC. © Springer-Verlag 2008.